Professional Documents
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Misrepresentation in Insurance
Law On Insurance
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Representation and
Misrepresentation in Insurance
Section 36. A representation may be oral or written.
What is a representation?
A representation is a factual statement made by the insured at the time of, or prior to, the
issuance of the policy to give, information to the insurer and otherwise induce him to enter into
the insurance contract.
What is a misrepresentation?
A Misrepresentation is a statement:
1.
2.
Which the insured stated with knowledge that it is untrue and with an intent to deceive or
which he states as true without knowing it to be true and which has the tendency to mislead; and
3.
Is misrepresentation synonymous
with concealment?
NO. Misrepresentation is an active form of concealment.
Section 37. A representation may be made at the time of, or before, issuance of the policy.
Section 41 provides that A representation may be altered or withdrawn before the insurance is
effected, but not afterwards.
Section 38. The language of a representation is to be interpreted by the same rules as the
language of contracts in general.
Section 39. A representation as to the future is to be deemed a promise, unless it appears that it
was merely a statement of belief or expectation.
Oral or written;
2.
3.
Affirmative or promissory
What is an affirmative
representation?
It is any allegation as to the existence or non-existence of a fact when the contract begins. An
example would be when the insured states that the house subject of the insurance is used only for
residential purposes.
What is a promissory
representation?
A promissory representation is any promise to be fulfilled after the contract has come into
existence or any statement concerning what is to happen during the existence of the insurance.
Examples of promissory
representations
1.
An applicant for fire insurance on a building orally promised that the building will be
occupied.
2.
An applicant for fire insurance on a building orally promised to install two fire
extinguishers within the bldg.
3.
Section 40. A representation cannot qualify an express provision in a contract of insurance, but
it may qualify an implied warranty.
Examples
1)
If the policy expressly provides that the house insured is used as a warehouse, any
representation made by the insured prior to the issuance of the policy to the effect that the house
was used only as a residence is NOT a defense in the action for the recovery of the amount of the
insurance.
2)
The representation of the insured to the effect that the last time the vessel was drydocked
was six months ago would NOT qualify the implied warranty that the vessel is seaworthy.
Section 41. A representation may be altered or withdrawn before the insurance is effected, but
not afterwards.
As representations induce the insurer in assuming the risk insured against and in issuing the
insurance policy, it is but logical that representations may not be altered or withdrawn after the
insurance is affected.
Section 42. A representation must be presumed to refer to the date on which the contract goes
into effect.